Debate on 16th Amendment

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Debate against the 16th Amendment Stacy Wiley Debate against the 16th Amendment The 16th Amendment to the U. S. Constitution reads that “The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several states, and without regard to any census or enumeration.” This issue on income taxation had started in the early 19th century when the Corporation Excise Tax Act of 1909 was enacted. Mitchell Bros. Co., a manufacturing company of lumber, filed a complaint for being taxed the erroneous amount on the gross sale of manufactured lumber. The manufacturing company bought a timberland at a cost of $20 per acre ($49/ha) in 1903. In 1908, its value increased to $40 per acre ($99/ha). From 1909 to 1912, Mitchell Bros. Co. paid taxes according to its land value of$40 per acre ($99/ha) when it should have only been taxed on its land value of $20 per acre ($49/ha) since the Corporate Excise Tax Act was enacted only in 1909. The U. S. Supreme Court ruled that the said company is to be taxed only on the increase in value after 1908. This case reflects that in any situation, retroactive tax is to be imposed according to the enactment date of a Congress Act. In the present situation with the 16th Amendment, taxpayers are fighting for the retroactive imposition of tax on incomes. Another argument on income tax had been raised regarding the definition of ‘income”. The Merchant’s Loan and Trust Company filed a case in 1921 a propos the imposition of income taxes on individuals and estates. The company complained that the gain on the sale of stock by the “Estate of Arthur Ryersonx, Deceased” was not taxable. Merchant’s Loan argued that income consists of only corporate profits, and therefore, only corporate profits are taxable. But the U.S. Supreme Court ruled that the income of a non-corporate taxpayer is

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